President Mahmoud Ahmadinejad plans to save up to $100 billion a year by phasing out subsidies on essentials. Gasoline is one of the most politically sensitive goods and sporadic riots flared when fuel rationing was introduced in 2007.
The subsidy phase-out had been due to start in the second half of the Iranian year, which began on Sept. 23, but Iranian authorities delayed implementation of the plan several times and have yet to announce the amount of the price hike.
Under a rationing scheme, introduced in 2007, a motorist can buy 60 litres of subsidised fuel per month for just 1,000 rials per litre (around $0.11), and beyond that amount they have to pay a “semi-subsidised” price of 4,000 rials.
Another Iranian official had previously said the final price of gasoline would be “much less” than 10,000 rials.
Kayhan daily quoted Economy and Finance Minister Shamseddin Hosseini as saying the new price would be 7,000 rials.
“The economy minister’s words were misinterpreted and reports in some media are untrue,” the ministry said, according to the semi-official news agency. The statement did not say what the price would be.
The government plans to make direct payments to poorer families to help ease price hikes for gasoline, natural gas, electricity, water and food.
Critics of the bill, say the policy will stoke inflation, which now is running officially at around 10 percent, and might revive the popular street-protest that followed Ahmadinejad’s disputed re-election in 2009. Opposition leaders say the election was rigged, something the authorities deny.
The Iranian economy is under pressure from international sanctions imposed on the Islamic state over its disputed nuclear activities.
The United States and its allies fear Iran is secretly developing nuclear weapons under the cover of civilian use. Iran denies the charge and says it needs the nuclear energy to meet its booming demand.
(Writing by Ramin Mostafavi; editing by Keiron Henderson)
